Tampa Mortgage Refinancing is Looking Up

By Richard Hadermann

Tampa Mortgage refinance and purchasing prospects should find themselves in a good situation in 2007 as consumers that may want to refinance could find themselves getting out of their current risky adjustable loan and getting themselves into a fixed loan program had a fairly reasonably-low interest rate. Richard Hadermann is a contributing editor for the mortgageobserver.net and has been evaluating the Tampa Mortgage market as well as housing on a national basis for the past five years.

My positive prediction is that housing in 2007 should rebound a bit from last year. The overwhelming general view is that the U.S economy is embracing for a soft landing. Although there are still many uncertainties that will obviously affect the overall outlook for the year such as inflation, energy prices, a currency crisis, etc... the housing market is probably the main downside risk to the economy. I was updating the mortgageobserver.net website the other day and I had to stop and think for a second that the worst really may be over for us as far as the downward turn in housing prices over the past year.

Richard Hadermann wrote some figures down to get an idea of the total number of houses for sale ( existing and new ) as a percent of total owner occupied units. In 2006 there was an estimated 3 million existing homes and 0.50 million new homes were for sale. These estimates might be off a little. If cancellations are included in the new home inventory, there are probably close to 0.65 million new homes for sale. These figures are very conservative so my guess is that 2007 will start off with a record number of houses for sale. The Tampa mortgage market will start off with an exceptional amount of housing inventory and hopefully by June or July should start balancing out a bit.

A recent email to mortgageobserver.net indicated that many consumers are dedicating a huge majority of there income to mortgage obligations. I agree that the homeowner with an adjustable loan that has recently ballooned may possibly be seeing an increase in their monthly mortgage obligations and the important aspect of the series of changes in debt service obligations is that even with historically low interest rates, many households are dedicating a record portion of their income to mortgage obligations.

The Fed recently reported that homeowner equity fell to a record low 53 percent compared to 54 percent from one year ago. In my opinion, this means that more homeowners have maxed out their "home ATM" One of the big concerns that I have is how the economy will be affected in the case of possible job lay-offs. Many industry analysts seem to believe that residential construction jobs may suffer in 2007.

In certain markets across the country, foreclosure rates may possibly be higher than normal opposed to other parts of the country. There are certain areas that were more accustomed for the "sub-prime"loan with no money down and the losses from these risky loans are already being felt in many markets.

Many industry wide experts are predicting that house prices will continue to decline in 2007. They believe that due to the record inventory and the impending foreclosures will put pressure on house prices in 2007. I have to appreciate their forecasts as this does fit historical pattern. Many mortgage insiders say that typically the second year of a housing bust is when prices start to fall. Usually busts are local due to a factory or big corporation folding but since the housing boom was national, many insiders of course feel that the bust will be widespread. The reason that these insiders believe in this theory is that housing "bubbles" typically do not "pop", rather prices deflate slowly in real terms over several years. Sellers tend to want a price close to recent sales in their neighborhood, and buyers, sensing prices are declining, will wait for even lower prices.

I keep www.mortgageobserver updated regularly as there seems to be new happenings in the mortgage refinancing spectrum and from what I'm hearing, I can now make the assumption that in an efficient market, prices would clear immediately, and we would see the entire price decline in a short period. However since prices are sticky, real estate markets do not clear immediately, and instead we see a drop in transactions.

Fannie Mae is projecting that existing home sales will fall as well as new home sales. One of the rarely told stories of the housing boom is the jump in turnover of existing homes. Many of the sales were from investment and second homes. I've always believed that the last couple of years has seen over building and in my opinion, this will as well contribute to a little bit of a slow down in new home sales. I'm estimating that with the falling home prices, mortgage equity withdrawal will decrease as people are seeing less equity in their home to extract. The impact on consumer spending is unclear and it will be a drag on economic growth.

Richard Hadermann is a 10 year veteran of the Tampa Mortgage industry and he writes for the web site http://www.mortgageObserver.net He gives his insight on the mortgage industry and also has a weekly internet podcast where he educates consumers on creative and new loan products as well as the risky loan products that you need to stay clear from.